That’s the thesis from Deutsche Bank strategist David Bianco, who Friday morning lifted his S&P 500 price target to 1600 from 1575, implying the index has another 7% upside from current levels.

Bianco, who rarely has found a bull market he didn’t like, says Congress’s latest effort to address the debt ceiling as well as a better-than-expected start to earnings season are driving his view. From Bianco:

“We are encouraged by recent legislation to sever the issue of spending cuts from the debt ceiling. A higher debt ceiling side-lines the tail risk of default on debt or entitlement payments and puts the focus on a new spending cut agreement or following through with sequestration. Given solid 4Q EPS reports and encouraging guidance, we now think that our 2013E EPS of $108 can withstand full sequestration.”

The S&P 500 recently rose 0.3% to 1499, on pace for an eighth straight day of gains. The index is already up about 5% this month after gaining 13% last year.

Even so, chasing the rally at this point isn’t necessarily a bad idea, Bianco says. “Sentiment has become more positive than the typical new normal gloom, but we maintain our view that the next 5%+ S&P 500 price move is likely up,” he says.

Bianco sees the S&P 500 hitting 1575, then pulling back a bit before making another push up to 1600.

“We don’t expect 1600 in the first half or to get through the summer without ~3% or 50 point pullbacks, but opportunities to buy the S&P at 1400 or lower have likely passed,” he says. “Thus, our best advice is to participate in the likely grind higher over the next few months with over-weights in tech and industrials.”

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Comments (2 of 2)

i called it 1st Bianco!! just like I'm calling SP500 1000 by 2016. don't expect growth to meaningfully pick up, yet the fed will have to scale back its unorthodox policies. the next presidential election will take place under 2008 like conditions. all that being said, I'll be fat, wealthy, retired, and out of the markets by then.

4:11 pm January 25, 2013

bridgecross wrote :

Obummer the Socialist's policies are keeping the real S&P 500 down below 1200 points. The numbers they are feeding you are lamestream media lies! When the house of cards comes down, the only worth folks will have is their gold and their means to protect it!

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